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Auto Insurance Resource Center - Learn, Compare, Save!
We have brought together the direct experience of working for two of the nations largest insurance companies and many years of online marketing experience to bring you valuable, credible and relevant information about auto insurance. From shopping for and purchasing cheaper auto insurance to detailed information insurance coverages and the claims process.
Part of our approach is to bring you a series of short, informative videos in which we will talk about some key auto insurance topics. To support these videos, we will also provide deeper information in the form of content, along with helpful links and resources that will all come together and help you gain a deeper understanding of auto insurance.
Part of our approach is to bring you a series of short, informative videos in which we will talk about some key auto insurance topics. To support these videos, we will also provide deeper information in the form of content, along with helpful links and resources that will all come together and help you gain a deeper understanding of auto insurance.
Insurance as Asset Protection & Risk Mitigation
Making the right decision with respect to your auto insurance may be even more important than you realize. Why is that? When most folks think about auto insurance, we think about our deductible and making sure our vehicles are covered in case of an accident. Though that is an absolutely viable thing to consider, the bigger question is are you adequately insured or protected in the event you are in accident, found to be at fault and liable for damages?
When we think about our auto insurance, I am going to suggest you think about it in a new way, a paradigm shift if you will. Auto Insurance actually provides us with a great layer of protection. Protection against what, you ask? Our assets. All of those things you work so hard for, such as your home, vehicles and your other toys. Without adequate auto insurance, those things we value could be put at greater risk in the event we are in an accident and determined to be at fault.
Before I get into greater detail about how your auto insurance is a integral part of protecting yourself, let me first provide a simple overview of what Insurance really is, all boiled down, and that is Risk Transference. I know that is a big phrase, but I will break it down - In it's most general sense, when you purchase insurance your are transferring the risk and associated costs of being involved in an accident to a 2nd party (insurance company) in exchange for a premium. When you do this, you are creating a legal agreement between you and your insurance company and it is seen as a fiduciary responsibility. As such, as long as your policy is in force, your insurance company has a legal obligation to protect you up to the limits and terms of your policy.
Ok, so that is risk transference in a nutshell. Now the actual reason behind the need to transfer the financial risk associated with being in an auto accident. Let's make an assumption to demonstrate the importance of seeing your auto insurance as a means to protect your assets: Assumption is you didn't have insurance at the time of the loss...
Scenario - you are in an accident, you t-boned another car (front of your car to the side of another) and totaled it, 2009 BMW 328 i that is worth about $30,000. In addition, the driver of that vehicle is injured, suffering soft tissue injuries to the neck and back. Oh yes, forgot, your car is totaled as well. Your car is an older vehicle though, and not worth much. That is the least of your worries here. You have a decent job with a decent income and some assets (house, boat, etc…) but all paid for, except your home, so you didn't insure them.
FIrst, you are in violation of your states law, unless you live in New Hampshire, as you didn't have liability insurance as required by law. Second, you have been determined to be 100% at fault for the accident and the other driver's insurance company has contacted you to discover you are uninsured. Since you don't have liability insurance, the insurance company will be pursuing you directly, assuming the other driver had coverage to pay for the damages, to recover what they paid out. Third, due to the injury you caused & that you don't have insurance, the other driver now has an attorney and the attorney is contacting you as they are looking for recovery as well for medical bills, lost wages and general damages (pain & suffering). Part of the due diligence the attorney will perform is an asset check to see if there is anything to go after.
I know, that is an extreme example, however, the point is that without auto insurance, your personal assets are on the line. When you have insurance, the insurance company will step in and not only deal with all parties involved, but also pay out damages to the extent of your coverage. Even if your limits may not be enough to cover damages, your insurance has an obligation to do it's best to resolve the claim within your policy limits in exchange for a release which will protect you from further collection attempts.
As you can now see, your auto insurance should be considered an integral part of your personal protection, not just for repairing damages to your vehicle. If you think of it this way, you will likely make more informed decisions when it comes to coverage amounts and the coverage you select. Be informed, protect your assets!
When we think about our auto insurance, I am going to suggest you think about it in a new way, a paradigm shift if you will. Auto Insurance actually provides us with a great layer of protection. Protection against what, you ask? Our assets. All of those things you work so hard for, such as your home, vehicles and your other toys. Without adequate auto insurance, those things we value could be put at greater risk in the event we are in an accident and determined to be at fault.
Before I get into greater detail about how your auto insurance is a integral part of protecting yourself, let me first provide a simple overview of what Insurance really is, all boiled down, and that is Risk Transference. I know that is a big phrase, but I will break it down - In it's most general sense, when you purchase insurance your are transferring the risk and associated costs of being involved in an accident to a 2nd party (insurance company) in exchange for a premium. When you do this, you are creating a legal agreement between you and your insurance company and it is seen as a fiduciary responsibility. As such, as long as your policy is in force, your insurance company has a legal obligation to protect you up to the limits and terms of your policy.
Ok, so that is risk transference in a nutshell. Now the actual reason behind the need to transfer the financial risk associated with being in an auto accident. Let's make an assumption to demonstrate the importance of seeing your auto insurance as a means to protect your assets: Assumption is you didn't have insurance at the time of the loss...
Scenario - you are in an accident, you t-boned another car (front of your car to the side of another) and totaled it, 2009 BMW 328 i that is worth about $30,000. In addition, the driver of that vehicle is injured, suffering soft tissue injuries to the neck and back. Oh yes, forgot, your car is totaled as well. Your car is an older vehicle though, and not worth much. That is the least of your worries here. You have a decent job with a decent income and some assets (house, boat, etc…) but all paid for, except your home, so you didn't insure them.
FIrst, you are in violation of your states law, unless you live in New Hampshire, as you didn't have liability insurance as required by law. Second, you have been determined to be 100% at fault for the accident and the other driver's insurance company has contacted you to discover you are uninsured. Since you don't have liability insurance, the insurance company will be pursuing you directly, assuming the other driver had coverage to pay for the damages, to recover what they paid out. Third, due to the injury you caused & that you don't have insurance, the other driver now has an attorney and the attorney is contacting you as they are looking for recovery as well for medical bills, lost wages and general damages (pain & suffering). Part of the due diligence the attorney will perform is an asset check to see if there is anything to go after.
I know, that is an extreme example, however, the point is that without auto insurance, your personal assets are on the line. When you have insurance, the insurance company will step in and not only deal with all parties involved, but also pay out damages to the extent of your coverage. Even if your limits may not be enough to cover damages, your insurance has an obligation to do it's best to resolve the claim within your policy limits in exchange for a release which will protect you from further collection attempts.
As you can now see, your auto insurance should be considered an integral part of your personal protection, not just for repairing damages to your vehicle. If you think of it this way, you will likely make more informed decisions when it comes to coverage amounts and the coverage you select. Be informed, protect your assets!
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